Indonesia has introduced a major update to its foreign investment framework with the Investment Coordinating Board (BKPM) Regulation No. 5 of 2025, simplifying the process for establishing foreign-owned companies (PT PMA).

The new regulation significantly reduces the initial capital requirements for foreign investors, marking a progressive step in the government’s effort to make Indonesia a more accessible and attractive destination for international businesses.

Simplified Capital Rules for PT PMA

Previously, foreign investors were required to inject a minimum paid-up capital of IDR 10 billion per company. Under the new rules, this threshold has been lowered to IDR 5 billion, effectively cutting the requirement by half.

The adjustment aims to encourage small and medium-scale foreign enterprises to enter Indonesia’s market, particularly in emerging sectors such as tourism, digital services, sustainable energy, and real estate development.

This shift reflects Indonesia’s strategy to diversify its investment portfolio and promote inclusive economic growth beyond large-scale corporate investors.

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Why It Matters for Foreign Investors

For many international entrepreneurs, the high capital requirement had long been a barrier to entry.
With this reduction, Indonesia is signalling a more open and flexible investment environment, aligning with its long-term vision to attract global innovation and expand job opportunities for local communities.

Foreign investors can now set up operations more efficiently, especially in regions like Lombok, Bali, and Labuan Bajo, where investment opportunities in eco-tourism and sustainable property development are rapidly growing.

Administrative Streamlining and Digitalisation

In addition to capital reforms, BKPM Regulation No. 5/2025 also introduces several administrative improvements:

• Faster online registration and licensing via the OSS (Online Single Submission) system.
• Simplified documentation requirements for business permits.
• Enhanced coordination between regional and central authorities, reducing bureaucratic delays.

These changes are designed to make the investment process more transparent and time-efficient, encouraging a higher volume of foreign participation.

Boosting Confidence in Indonesia’s Investment Climate

This new regulation complements other recent reforms aimed at improving Indonesia’s business environment, such as the Omnibus Law on Job Creation and tax incentives for strategic industries.

By making it easier to establish and operate a PT PMA, Indonesia continues to position itself as a competitive and investor-friendly market in Southeast Asia.

Conclusion

The BKPM Regulation No. 5/2025 marks a decisive move toward a more inclusive and dynamic investment landscape.
With lower capital barriers and streamlined procedures, Indonesia is now better equipped to attract a new wave of foreign entrepreneurs and innovators—especially in fast-growing regions like Lombok and Bali.

As global investors seek stable, sustainable opportunities in Southeast Asia, Indonesia’s 2025 reform stands out as a key milestone in building a more open, future-ready economy.

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